Mid-caps rebound, courtesy FIIs

The mid- and small-cap indices have bounced back in the New Year, courtesy foreign institutional investors, which have bought heavily in these counters in the current month.

While the mid cap index is currently trading at an all-time high level, the small index is hovering around that level touched on May 10, 2006.

Interestingly, both the indices have outperformed the BSE Sensex during the first 15 trading days of the current calendar year.

The BSE small-cap index appreciated by 9.69 per cent and mid-cap index by 4.66 per cent compared to the Sensex gain of a 2.9 per cent. The trend started in the quarter ended December 2006, with FIIs increasing their holding in mid-cap and small-cap stocks.

They have bought 379 million shares valued at Rs 8,241 crore, particularly from technology, pharmaceuticals, textiles and non banking finance sectors.

The study is based on 473 companies that are part of the mid-cap and small-cap index compiled by the Bombay Stock Exchange.

The study reveals that FIIs raised their holdings in 250 firms and kept holdings unchanged in 55 firms. They have booked profit by selling 143 million shares valued at Rs 2,511 crore in 168 firms.

Of the 250 companies in which the FIIs have increased its stakes, 23 are mid-cap technology firms, 14 each are from pharmaceuticals, textiles and non-banking financial firms, 13 are from constructions, 11 banks, 10 are auto-ancillaries and five each are from engineering, fertilizers and hotels.

FIIs increased their stake more than 10 per cent in eight companies during the quarter. They increased their holdings in 26 stocks by 5-10 per cent and in 99 stocks by 1-5 per cent.

The stocks, which are part of the mid-cap and small-cap index, were laggards during the second half of the last calendar year. These indices underperformed the benchmark indices in the rally, which was driven by large cap companies.

Among the small and mid cap companies, the FIIs have minimum 15 per cent stake in 21 firms compared to nil or no holding as on September 30, 2006. They currently hold over 10 per cent stake in Donear Industries (15.26 per cent), Techno Electric and Engineering (14.30 per cent) and Info Edge (13.25 per cent).

FIIs' stake in Asian Electronics, Mahindra Gesco Developers, UTV Software Solutions, IVRCL Infrastructures, Deccan Chronicle, Rolta and Varun Shipping increased by over nine per cent each.

Merrill Lynch Capital Markets Espana SASV (7.69 per cent) and Citigroup GLobal Markets Mauritius (6.34 per cent) bought more than 5 per cent stake in in the December quarter.